Capital Ideas

Investment insights from Capital Group

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Long-Term Investing
Taking a long-term view
KEY TAKEAWAYS
  • We are singularly focused on delivering superior, consistent results for long-term investors
  • Globally integrated, fundamental research powers our ability to identify investment opportunities and risks
  • Our unique investment process combines the benefits of individual conviction with team diversification and idea-sharing, in delivering a focused range of investment solutions

Our private ownership and strong balance sheet afford us the ability to maintain a long-term focus


Since our founding in 1931, Capital Group has been owned primarily by the people who work here every day. Private ownership is a cornerstone of our ability to think long term when it comes to planning and investing. Among other things, it allows us to avoid the quarterly earnings pressures that can constrain publicly-traded companies and lead to short-term thinking. It also gives us the freedom to put client needs first and make strategic decisions that benefit our clients rather than outside shareholders.


This focus on our clients, along with having no debt on our balance sheet and maintaining a substantial amount of available cash, means that in times of volatility, we can hold a steady course and continue to invest for the future. This stability, and focus on delivering superior, consistent returns for our clients over time, has resulted in Capital Group being entrusted with over US$2 trillion in assets under management.1


The stability of our company has enabled us to continue improving our investment capabilities for the benefit of investors during good markets and bad. For example, over the last four years our fixed income team has grown from 119 to 1902. Our fixed income investment process has evolved over the last 10 years as the investment environment has changed, to ensure that we continue to meet the needs of our investors. We have greater global coverage both from a research and portfolio management perspective than we have ever had. Our risk management process and control systems have been enhanced and our level of dedicated resources in this area is higher than it has ever been.


The Capital SystemSM – a consistent philosophy and process


Early in Capital Group’s history, our leaders realised that their funds would outlast the professionals who managed them. They believed they had a responsibility to provide stability and management continuity to their investors, so they asked themselves a key question: If a portfolio manager left the firm, how could they keep funds going strong?


In the single or ‘star manager’ system, transitions can be extremely disruptive. When a manager retires or leaves a firm or a strategy, portfolios can undergo dramatic changes in approach, holdings and risk characteristics under the new leadership. This requires clients and their advisors to re-examine their original choice of investment. They need to review how the new approach fits with their requirements, and potentially will be forced to make changes – with inevitable implications in terms of risk, time and cost. At Capital Group we pioneered a solution. By dividing funds into sections and giving each of the existing managers a portion to invest, no fund would be too dependent on a single person.


Over several decades, we’ve established and fine-tuned what we call The Capital SystemSM, which provides a unique framework for portfolio management that promotes collaboration within the investment groups while encouraging individual investment professionals to pursue their highest-conviction ideas. This approach combines the best independent decisions of experienced investors into a single portfolio that results in greater diversification and reduced volatility.


1. As at 31 December 2020


2. As at 31 December 2020


 


Risk factors you should consider before investing:

  • This material is not intended to provide investment advice or be considered a personal recommendation.
  • The value of investments and income from them can go down as well as up and you may lose some or all of your initial investment.
  • Past results are not a guide to future results.
  • If the currency in which you invest strengthens against the currency in which the underlying investments of the fund are made, the value of your investment will decrease.
  • Depending on the strategy, risks may be associated with investing in fixed income, emerging markets and/or high-yield securities; emerging markets are volatile and may suffer from liquidity problems.

 



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Past results are not a guarantee of future results. The value of investments and income from them can go down as well as up and you may lose some or all of your initial investment. This information is not intended to provide investment, tax or other advice, or to be a solicitation to buy or sell any securities.

Statements attributed to an individual represent the opinions of that individual as of the date published and do not necessarily reflect the opinions of Capital Group or its affiliates. All information is as at the date indicated unless otherwise stated. Some information may have been obtained from third parties, and as such the reliability of that information is not guaranteed.